It has been about a month since the last earnings report for BioMarin Pharmaceutical (BMRN). Shares have lost about 0.9% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is BioMarin due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
BioMarin Q4 Earnings & Sales Miss Estimates
BioMarin missed estimates for earnings as well as revenues in the fourth quarter of 2018.
Adjusted loss of 7 cents per share in the fourth quarter was in sharp contrast to the Zacks Consensus Estimate of earnings of 10 cents. Adjusted loss per share was 1 cent in the year-ago quarter.
The adjusted loss excludes amortization, depreciation, stock-based compensation and a contingent consideration expense; benefit from income tax; and a gain on sale of intangible assets.
Total revenues were $353.2 million in the reported quarter, down 1% from the year-ago period owing to lower product revenues. Moreover, sales also missed the Zacks Consensus Estimate of $380 million.
Product revenues were $347.2 million in the fourth quarter, down 1.2% year over year, on account of lower Naglazyme sales and Aldurazyme sales volume. Royalty and other revenues were $6.06 million in the reported quarter, higher than $4.7 million in the year-ago period. New drugs Brineura and Palynziq did well in the quarter.
Kuvan revenues rose 4% to $112.2 million. Kuvan sales were hurt, to an extent, by patient switching to Palynziq, given its superior efficacy profile.
Naglazyme sales declined 18% year over year to $76.7 million due to volatility of central government ordering patterns. Vimizim contributed $114.0 million to total revenues, flat year over year.
Naglazyme and Vimzim revenues vary on a quarterly basis, primarily due to the timing of central government orders from some countries, mainly Brazil.
BioMarin received Aldurazyme royalties – totaling $17.4 million – from Genzyme in the quarter, down 39% year over year owing to lower volume of product sales to Genzyme due to unfavorable timing of shipments.
Brineura generated sales of $12.2 million in the fourth quarter compared with $9.9 million in the previously reported quarter, indicating a sequential increase of 23.2% as BioMarin continued to add new commercial patients.
Palynziq injection grossed sales of $8.1 million in the fourth quarter compared with $4.1 million in the third quarter of 2018.
As of Feb 15, 2019, 335 U.S. commercial patients were on treatment with Palynziq. Of the 335 patients, 123 were from clinical studies and 212 were naive to Palynziq treatment. Another 131 patients have enrolled and are awaiting their first commercial treatment with Palynziq. In the EU, a marketing application is under review with a decision expected in the second quarter of 2019. A CHMP recommendation for European approval of Palynziq is anticipated in the first quarter of 2019.
Research and development (R&D) expenses rose 1.6% year over year to support expansion of its pipeline program. Selling, general and administrative (SG&A) expenses increased 2.6% in the quarter due to marketing expenses associated with Brineura and Palynziq commercial efforts.
As of December 31, 2018, BioMarin had $1.3 billion in cash, cash equivalents and investments, versus $1.6 billion as at the end of September 30, 2018.
Full-year 2018 sales rose 14% to $1.49 billion, marginally missing the Zacks Consensus Estimate of $1.51 billion. Revenues were within the guided range of $1.47-$1.53 billion.
Adjusted earnings for 2018 were 40 cents which missed the Zacks Consensus Estimate of 65 cents. However, earnings rose 53.9% year over year.
BioMarin anticipates total revenues in the range of $1.68-$1.75 billion in 2019. This indicates year-over-year growth of approximately 15% based on the presently approved products.
Vimizim sales are expected in the range of $530-$570 million. Kuvan sales are projected in the range of $420-$460 million. Naglazyme sales are projected in the range of $350-$380 million. Brineura sales are expected in the range of $55-$75 million. Palynziq sales are expected in the range of $70-$100 million mostly from U.S. market. The Palynziq 2019 guidance range does not include any material EU revenues, if approval is received in the region.
R&D costs are expected to be within $740-$780 million. SG&A expenses are projected in the range of $650-$690 million.
The company expects adjusted net income in the range of $130 million to $170 million, a year-over-year improvement of 65% from the mid-point.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -408.27% due to these changes.
At this time, BioMarin has a great Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. However, the stock was allocated a grade of F on the value side, putting it in the bottom 20% quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise BioMarin has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
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